Paying for What? How Much? And Why (Not)? Predictors of Paying Intent for Multiplatform Newspapers

Abstract

Abstract Propelled by the recent economic recession that caused substantial declines in advertising revenue, some major newspapers have renewed their efforts to find alternative revenue models. This renewed interest in paid content strategy triggered another round of debates on the viability of the "paywall." To address the recurring industry debate, this study, based on a national survey of 767 U.S. online adults, systematically evaluated users' paying intent for different newspaper formats, the amount they are willing to pay, as well as users' responses to various payment models being considered by the industry. Results showed the print edition outperforms other formats (Web & "apps") in terms of usage, preference, and paying intent; and is perceived as the most valuable platform. Paying intent for the online formats (Web & apps) was weak, and so was people's response to each of the 6 payment models under study. Therefore, how users are charged does not make much difference—whether they are charged does. The analysis also identified the predictors of paying intent for newspaper formats and different payment models. Although multiplatform news delivery has become a reality, paying intent for digital news content remains elusive. ACKNOWLEDGMENTS This study was funded by the 2009–2010 University of Texas at Austin Faculty Research Grant. Special thanks go to James M. Moroney, III, publisher of The Dallas Morning News, and Bill Tanner, senior director of strategic research, for offering important advice from the industry's standpoint. I also thank Jacie M. Yang, Avery Holton, Angela M. Lee, Kelly Kaufhold, and Erin Brady for their assistance. Notes 1. For example, The Times of London, The New York Times, and The Dallas Morning News. 2. The rest were print subscribers who got access for free. 3. As of 2006, The Financial Times was the only major newspaper in the United Kingdom that charged users for its financial news content (CitationHerbert & Thurman, 2007). 4. It is noted that subscribers of the print edition and of Optimum Cable, which is affiliated with the newspaper, are allowed free access. Newsday representatives assert that 75% of Long Island residents either subscribe to the newspaper or Optimum Cable (CitationKoblin, 2011). 5. Price elasticity of demand is defined as percentage change in quantity demanded divided by percentage change in price. 6. Newspaper use was the only significant factor having a positive influence on paying intent for online news. 7. In multi-attribute models, price is often conceptualized as a major product attribute (CitationBass & Talarzyk, 1972; CitationErickson & Johansson, 1985). 8. Although conjoint analysis allows for the inclusion of more than two attributes, this exploratory test focused on two primary attributes, as they are the key factors defining newspapers' paywall plans. In addition, because the data were collected from a national survey, it is impossible to include individual newspapers' characteristics (such as interactivity, multimedia content, etc.) in the analysis. 9. For example, the two Philadelphia newspapers have been offering discounted tablets bundled with a 1- or 2-year contract for its apps (Citation"Seize the Future," 2011). 10. This model is also known as "mass customization" (CitationSchoder, Sick, Putzke, & Kaplan, 2006). A small-scale survey of Swedish users reported that 22% of the respondents said they were willing to pay for personalized news services (CitationIhlström & Palmer, 2002). 11. The Nielsen survey showed that 78% of the respondents believe if they already subscribe to a newspaper, magazine, radio, or television service, they should be able to use its online content for free (Nielsen, 2010). 12. An active panelist is defined as someone who has taken a survey within the past 6 months. 13. The six options were not intended to have comparable value. 14. As of January 2011 (that was > 5 months after the survey was conducted), only 11% of the total American adult population used an app to access local news and information (CitationRosenstiel, Mitchell, Rainie, & Purcell, 2011). 15. In this case, they are scaled to sum to zero within each attribute (CitationOrme, 2006). 16. The metered model would be an exception because it affects only heavy users. 17. In addition, in the United States, the penetration rate of the computer is much higher than that of most mobile technologies, and some mobile devices (e.g., iPad®) also require users connect such devices to a computer to be activated or managed by applications developed by the manufacturer. So, surveying Internet users through a Web-based survey means that most mobile device users (who are potential app users) were included in the sample. 18. Even by April 2011, fewer than 2 in 10 newspapers had a tablet app (CitationJenner & Fleming, 2011). 19. This frame was used in the questions on willingness to pay for three newspaper formats, conjoint analysis, and paying intent for six payment models.